The Chicago Tribune reports that Faber advised that gold is a “protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates.”
Faber said rates are so low that investors can’t make money in bonds so they keep buying stocks even though the prices are very inflated. Central banks want rising stock prices to make people feel wealthy and therefore spend their money, but the end result is income inequality and investor resentment, he said.
“Faber told the investment professionals gathered in Chicago that they shouldn’t be prejudiced against gold. Although the typical investment pro keeps less than 1 percent of his or her portfolio in gold, Faber suggests 25 percent. He sees it as protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates. Besides gold, Faber has invested in Asian real estate and some stocks and bonds.”
“It’s ludicrous to think that slashing rates will get people to spend.” When rates are low, he says, you feel insecure as savings earn nothing. So, “you save more” according to the Chicago Tribune.
Faber told us in a webinar in 2014 how he will “never sell his gold”, he buys “more every month” and he believes owning gold in vaults in Singapore “is safest.”
